The Moody's Investors Service has said that the total capital shortfall of the banking sector in Spain could touch $135 billion or 105 billion euros, which about double the amount estimated by the government in the previous week.

According to the latest estimates, the banks in the country might need infusion of between 70 billion euros and 105 billion euros for absorbing losses and making sure that their capital ratios do not go under the threshold set by the lawmakers in the previous year.

The new estimates by Moody's analysts are much higher than an estimated 53.7 billion euro shortfall predicted by the authorities following a stress test that was aimed at clearing uncertainty over the situation in the country's banking sector.

Analysts, Maria Jose Mori and Alberto Postigo, said in the report that, "The recapitalization amounts published by Spain are below what we estimate are needed for Spanish banks to maintain stability in our adverse and highly adverse scenarios."

They also wrote in the report that if the investors are not convinced with the stress test then it might contribute to negative sentiment and undermine government's efforts to help the sector begin recovery.